Collaboration and integration among the various parties involved in any Supply Chain is essential for achieving common goals and obtaining mutual benefits. To elaborate, collaboration in the supply chain helps in increasing supply chain efficiency in procurement, production and distribution, offers higher flexibility, leveraging world class technology without much capital investment, improves visibility, safety & compliance Factors, and enables reasonable cost reduction.
Collaboration in supply chain can be internal or external, pertaining to individuals, departments, suppliers or partners and organizations. It can be in Sourcing, whether in freight consolidation, using multiple distribution channels effectively or in vendor managed inventory. It can also be integration in inventory management or a collaborative distribution system.
Organized 3PL players act as consolidators in various forms as they collaborate with different entities such as:
- With customers – For an integrated and customized supply chain set up, 3PL companies collaborate with manufacturers, traders, retailers, E-commerce, buying agents etc.
- With carriers – To manage end to end supply chain, collaboration is done with Airlines, shipping lines, rails, truckers as well as with courier companies
- With agents – Collaboration with various agents like custom house agents, NVOCC, IATA and other insurance authorizes are done during international logistics
- With Infrastructure providers - Support of proper infrastructure is a must; hence 3PL companies collaborate with ports for open yards, bounded warehouses or standalone warehouse along with latest logistics technologies like ERP, track and trace, WMS etc.
- Staying Interconnected – Integration between Customers, Suppliers, Service Providers is difficult as needs differ
- Short Term Focus - If management is incentivized based on short-term results, then investments in long-term stability can be a hard sell
- Technology Compatibility – Inherent difficulties in supporting a wide array of external ERPs, internal systems for planning, procurement, finance with connectivity protocols
- Balancing the Benefit - Partners need to see on an on-going basis, tangible benefits in continuing business with your company.
- Collaborative Execution - Connecting information flow across various trading partners and synchronizing it for quick problem solving can be tricky
Hence, making the right choice in partners for collaboration in supply chain is necessary.
- Collaborate on strengths rather than for compensating for weaknesses
- Select partners based on capability, strategic goal & value potential
- Invest in right infrastructure and right resources
- Establish a robust, joint performance management system
- Trust, mutual benefits, transparency and extensive information sharing
- Collaborate for the long run